Aims: To examine the associations of the liver enzymes alanine aminotransferase (ALT), aspartate aminotransferase(AST), and gamma-glutamyl transferase (GGT) with diabetes risk and to determine whether associations differ by race and/or gender. We hypothesized that all liver enzymes would be associated with diabetes risk and that associations would differ by race and gender. Methods: Prospective cohort of 7495 white and 1842 black participants without diabetes in the Atherosclerosis Risk in Communities Study. Poisson and Cox models adjusted for demographic, socio-behavioural, and metabolic and health-related factors were used. Results: During a median of 12 years of follow-up, 2182 incident cases of diabetes occurred. Higher liver enzyme levels were independently associated with diabetes risk: adjusted hazard ratios (95% confidence intervals) were 1.68 (1.49-1.89), 1.16 (1.02-1.31) and 1.95 (1.70-2.24) comparing the highest with the lowest quartiles of ALT, AST, and GGT, respectively. Gamma-Glutamyl transferase was most strongly related to diabetes risk, even at levels considered within the normal range (≤ 60 U/l) in clinical practice. Adjusted incidence rates by quartiles of liver enzymes were similar by gender but higher in black versus white participants. Nonetheless, relative associations of ALT, AST, and GGT with diabetes were similar by race (P for interactions > 0.05). Conclusions: Compared with ALT and AST, GGT was more strongly associated with diabetes risk. Our findings suggest that abnormalities in liver enzymes precede the diagnosis of diabetes by many years and that individuals with elevated liver enzymes, even within the normal range as defined in clinical practice, are at high risk for diabetes.